GAO: Hardest Hit Funds Consumed By Administrative Expenses and Too Little Money Getting to Borrowers

Confounded Interest ^ | 07/20/2012 | Anthony B. Sanders

[whitedog57]

The Government Accounting Office (GAO) released a report entitled “TROUBLED ASSET RELIEF PROGRAM: Further Actions Needed to Enhance Assessments and Transparency of Housing Programs.” The report is not a flattering portrayal of their efforts to provide transparency for TARP.

I testified in the House of Representatives in 2008 on transparency for the $700 billion TARP saying that “Greater transparency about use of the TARP money can alleviate concerns among U.S. taxpayers and the investment community that the funds are being used appropriately and not being wasted.” Apparently, Secretary Geithner didn’t agree with my testimony.

So, what did the GAO conclude in their study?

First, a substantial portion of the Hardest Hit Fund went to administrative fees. In Nevada, around 75% of the Hardest Hit Funding went towards administrative expenses (national average was 27%).

To quote long-time Vegas crooner Dean Martin, “Ain’t That a Kick in the Head!”

Administrative Expenses as a Percent of Total Hardest Hit Fund Disbursements, by State, as of March 2012

Second, they found that trial loan modifications (HAMP) started off with a bang, but have subsided to a dull throb.

Figure 1: Monthly HAMP Trial and Permanent Modifications Started, January 2010 through April 2012

I guess that calls for an encore from Dino.

Third, the Hardest Hit Fund seems to be painfully slow to be distributed.

Figure 3: Hardest Hit Fund Allocations and Borrower Assistance Provided, as a Percentage of the Total Allocation, by State, as of March 2012

The states of Georgia and New Jersey have barely allocated their shares of the Hardest Hit Fund.

Encore of “Ain’t That a Kick in the Head?” This one from Westlife.

Yes, Treasury has not done a stellar job with TARP transparency. All the more reason to pull the plug on unspent funds and stop the HAMP programs.

[whitedog57]

This economist is right on the mark. Nevada used its HARDEST HIT Fund money for administrative expenses, not helping borrowers. AKA, slush fund.

[E. Pluribus Unum]

The federal government cancer has metastasized.

The host is terminal.

[RetiredTexasVet]

Previously known as the Harry Reid re-election fund.